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JUDGMENT
ANSAH, J.A.:
I also agree that this
appeal must be allowed. However I have decided to add a
few words to the Judgment just read. The facts
surrounding this case have already been narrated and I
shall therefore save myself the burden of repeating them
here and will only refer to a few of them when it
becomes necessary so to do.
I shall begin by
quoting from the judgment under appeal wherein the
learned trial judge said inter alia that:
“It is my finding that
since both interests are not registered, the first in
time should prevail. It was incumbent on the claimants
to make a search to satisfy themselves that the disputed
house was not encumbered. This they failed to do and
went ahead to purchase the house at their own peril. The
contract of sale entered into between the plaintiffs and
the defendants cannot be defeated by a sale made eight
months later.
The next issue to
consider is whether the claimants can come under the
umbrella of innocent purchasers without notice....”
It was in evidence that
at a point in time the defendant could not be traced. He
was served by substituted service and processes were
posted at the building the subject matter of this
appeal.
This I find was notice
to the claimants that there was some court action on the
judgment. The claimant could have taken action by
joining the suit or taken some other steps. They failed
to take any such steps and with the postings affixed on
the building, I find the claimants cannot claim to be
innocent purchasers without notice.”
There can be no doubt
whatsoever that where the equities are equal, the first
in time shall prevail, an equitable maxim rendered with
some classical flourishes as:
“Qui prior est tempore
potior est jure.” he who is earlier in time is stronger
in law. Whilst not denying the poignancy of this maxim
it must also be stated that there is nothing inflexible
or sacrosanct about it. Expose it to the test
encapsulated in the doctrine of the bona fide purchaser
of a legal estate without notice, and its brittle nature
becomes clear. See Usher vrs: Darko 1977 1 GLR.476. For
this latter doctrine to apply, the onus is on the
purchaser to prove that he gave value for the property
as a result of which he obtained the legal estate and
this he did without notice, actual, constructive or
inputed. It is apparent from the passage in the Judgment
referred to above that the trial judge reasoned that as
there were Court processes posted on the building then
the claimant should have known that it was encumbered.
That way so far there was no evidence that the claimant
had actual notice that there was any encumbrance on the
building: neither was any notice imputed to him. It is
this Constructive notice that he must be looked at now.
Now the Conveyancing
Decree, 1973, NRCD.175 provides in section 36(4) that “A
purchaser shall not be deemed to be or ever to have been
affected with notice of any matter or thing of which he
might have had notice if he had investigated the title
or made inquiries in regard to matters prior to the
period of commencement of title ascertained in
accordance with sub-section (1) (2) or (3), Unless he
actually makes such investigation or inquiries.”
Section 36 as a whole
deals with statutory Commencement of title, which is
pegged under section 36(1) at Thirty years. A purchaser
is expected to investigate the title of his vendor for
that period of time. The common law is that a purchaser
will be held to have had notice of what appears on the
title for the period. Now the Decree has done away with
that rule. The rule will come to play only upon one
condition, namely, where the purchaser actually makes
the investigation or inquiries. In other words where the
purchaser did not make the search, investigations or
inquiries, he would not be fixed with notice of what he
would have discovered as to the title of the vendor.
Such a purchaser under section 36(1) cannot be said to
have had constructive knowledge of any prior title of
the property. It is clear that in this wise the Ghanaian
law is not in accord with the Common law.
The trial judge said
that it was incumbent on the claimants to have made a
search to satisfy themselves that the house was not
encumbered. I think the consequences of his failure to
make a search have been taken care of by section 36(4)
for the Decree. Simply put it does not mean the claimant
has constructive knowledge of what he would discover if
he had made the search. On the facts of this case, the
plaintiff did not register his title and it is wondered
what the claimant would have discovered if he had made
the search in the first place. I hold that the failure
of the claimant to make the search should not have
driven the judge into dismissing the claim, as she
seemed to have done. Still under the doctrine of the
bona fide purchaser without notice, it is important that
due consideration is given to the bona fides or good
faith of the purchaser. The dictionary of English Law by
Earl Jouitt defined good faith at p.890 as follows: —
“A thing is deemed to
be done in good faith if it is done honestly whether or
not it is done negligently.”
In Kwaku Badu vrs: Op.
Kwaku Appiah; unreported, Written Judgments, January
-December, 1967, (Civil) p.135. Crabbe, J.A. as he then
was, dealing with the issue of “good faith” in an action
for the recovery and possession of a piece of land, said
at p.140 that:
“I would add that if
there was anything which could arouse the suspicion of
the (farmer) that there was something wrong with the
transaction leading to the acquisition of the land, he
would not be acting in good faith if he shut his eyes to
the facts, or purposely abstained from inquiring into
them.”
The learned judge went
on to add that the purchasers must show that his belief
was honestly held and founded upon reasonable grounds.
It is beyond doubt that a person’s bona fides is
subjective but objectively determined. The meaning is
that to arrive at whether or not a person acted in good
faith one necessarily has to consider all the
circumstances and the facts surrounding the purchase as
a whole. Thus in Dr. Oklikah vrs Col. Amusu Civil Appeal
No. 9/66 dated 26 March, 1997, unreported, the Supreme
Court in its unanimous Judgment allowing the appeal of
the defendant/appellant in a land matter considered
inter alia the issue whether the plaintiff had prior
notice of the defendants equitable interest in the
disputed property and also the fraud perpetrated by the
vendor. The court held unanimously that the plaintiff
knew that the appellant was the first to have bought the
property. He armed with that knowledge, nevertheless
went on and purchased the property and rushed to have
his document registered before the appellant did. The
Supreme Court did not give its blessing to this
practice. In this appeal, the trial judge did address
herself to the issue as to whether or not the claimant
was an innocent purchaser without notice. She resolved
that issues this way. I have already referred to parts
up of her judgment on this issue.
“It is in evidence that
at a point in time, the defendant could not be traced.
He was served by substituted service and processes were
posted at the building the subject matter of this suit.
This I find was notice to the claimants that there was
some court action on the property. The claimants could
have taken action by joining the suit or taken some
other steps. They failed to take any such step and with
the postings affixed on the building. I find that the
claimants cannot claim to be innocent purchasers without
notice.”
There are several
reasons why the trial judge erred in concluding as she
did that the claimant could not be held in law to have
purchased the property without notice. In the first
place she did not bother herself with finding what these
processes which were served by substituted service were.
It was not enough for her to have just said that
processes were served; She should have found out and
stated what they were and whether or not they were
enough to tell the world that the property was a subject
matter of a dispute so as to put the claimant to the
inquiry.
Secondly it did not
appear that there was any evidence to support a finding
that at all times material, the “process” were affixed
on the property. Thirdly, and that is the most important
reason, counsel for the plaintiff made it abundantly
clear from his written submissions that the writ of
summons in the matter between the plaintiff and the
defendant was issued or filed on 7th February, 1996.
The claimant on the
other hand fully paid the ¢23 million for the house on
6th September, 1995 as per Exhibit BB1. The inference
from the chronology of events was that the claimant
bought the house before the plaintiff instituted his
action against the defendant. In these circumstances
even if any “processes” were posted on the building, it
was done some months after the claimant had purchased
that house. It would be unreasonable to hold that the
claimant or for that matter anybody should have been
aware of the fact that someone else had bought the house
earlier. When one talks of notice, one meant actual
knowledge or cognisance before or at the time of the
transaction in question, or what he would have known if
he had made proper searches and investigated the title
of his vendors before he purchased the property. Even if
it could be said that the posting of court processes on
a house was enough to put an intending purchaser on the
alert, the fact that same were posted after the purchase
had on the evidence already been completed, made it
unreasonable for the conclusion to be drawn that the
purchaser had notice. I think if the trial judge had
been a little more circumspect on these facts she would
not have come to the conclusion she did so far as the
issue of notice was concerned. She erred on this issue.
The plain fact in this
action was that neither the plaintiff nor the defendant
registered their title to the property: Registration in
effect is actual notice of the instrument to the whole
world, under section 25(1) of the Land Registry Act,
1962, (Act.122), As there was no registration, none
could be held to have had any actual notice of any
purchase. What was more, the plaintiff was never in
possession and it was not open to say that his (i.e.
plaintiff) presence in the house was enough to send the
claimant on the inquiry as to the defendant’s title.
On the facts before the
court the defendant gave a written consent to transfer
the house to the claimant and informed the Managing
Director of the State Housing Corporation accordingly:
See Exhibit BB.3. On the authority of Ayekpa vrs: Sackey
Mensah 1984-86 1 GLR.173 that act conferred the legal
title on the claimant.
Looking at the
circumstances of the case as a whole one could not help
concluding that the plaintiff did not exhibit that
vigilance which would be expected of someone who wished
to be aided by equity. He appeared to have relapsed into
a deep hibernation soon after paying part of the
purchase price to the defendant. It was unfathomable how
the claimant could have effected these massive work in
reconstructing and developing the house in the manner he
described without the plaintiff seeing it or challenging
him. This is the kind of indolence equity will frown
upon and refuse to lend a helping hand. I think an
objective appraisal of the facts shows that the claimant
was an innocent purchaser without notice of the
plaintiff’s equitable interest in the house. As the
trial judge dwelt predominantly on the issue of notice
to dismiss the claimant’s title to the house, she erred
in her judgment.
I cannot end my
judgment without condemning the conduct of the
defendant. He is just like the appellant in Zeini vrs:
Schandorf 1976 2 GLR. 418; he was a vogue. He after
collecting some millions of Cedis from the plaintiff for
the purpose of selling a house to him collected more
money from the claimant for selling the same house to
him. This sort of sordid practice is frequent in this
part of the country and many unsuspecting purchasers
have fallen victims to these diabolical machinations of
people like the defendants in this case. It was time
they put an end to this infamous practice. I register my
abhorrence to this sort of shady practice and make
myself clear that if the evidence had shown that the
claimant was aware in any way of the plaintiff’s dealing
with the defendant on the house or that he in any way
fainted himself or was a participant in the fraud or the
plaintiff, I would have opined that the plaintiff should
be protected. It was not so hence my decision to cast my
vote in favour of the appeal succeeding. In short I
agree that the appeal be allowed, even as I concur in
the orders made.
J. ANSAH
JUSTICE OF APPEAL
FARKYE. J.A.:
The judgment is in
respect of an appeal against the ruling to an
interpleader of Her Lordship Justice Kusi-Appouh, which
was delivered on the 27th day of March 1998 at the Accra
High Court.
The facts culminating
to the ruling of the High Court are that the
Defendant/Judgment/ Debtor was an employee of the
National Procurement Agency. The National Procurement
Agency granted Simon Bobi-Ntiri, the
Defendant/Judgment/Debtor a loan to enable him to secure
House No.18 Macroni Street Adenta Accra, from State
Housing Corporation.
The National
Procurement Agency upon the termination of the
appointment of the Defendant/Judgment/Debtor demanded
the repayment of the balance of the loan, which was at
that time ¢9,937,741.20. That the National Procurement
Agency would take over the house if the balance was not
paid by the Defendant/Judgment/Debtor to the National
Procurement Agency.
The
Defendant/Judgment/Debtor then in January, 1995 agreed
with the Plaintiff/ Judgment/Creditor to sell the said
house to the Plaintiff/Judgment/Creditor for the sum of
¢16,500,000.00.
It was agreed that the
payment was to be made in installments, the 1st
installment of ¢11,000,000.00 was to be made as quickly
as possible to enable the Defendant/Judgment/ Debtor
repay the loan he took from the National Procurement
Agency.
On the 25th January,
the Plaintiff/Judgment/Creditor/Respondent and the
Defendant/ Judgment/Debtor entered into an agreement for
the sale of the said house to the Plaintiff/
Judgment/Creditor/Respondent. Eight months after the
execution of the contract between the
Plaintiff/Judgment/Creditor and the
Debtor/Judgment/Debtor/Respondent, the
Defendant/Judgment/Debtor/Respondent sold the same
house/property to the Claimant/ Appellant for an amount
of ¢23,000.000.00 and the Claimant/Appellant paid the
Defendant/Judgment/Debtor/Respondent an amount of US
$20,000 being the equivalent of the purchase price. The
Claimant/Appellant was put in immediate possession and
he developed the house from two bedrooms to four-bedroom
house and also made a wall around the house costing him
35,000 US dollars.
The
Defendant/Judgment/Debtor did not put the
Plaintiff/Judgment/Creditor/Respondent in possession of
the house and on 6th April, 1996 the Plaintiff/
Judgment/ Creditor/ Respondent issued a Writ of Summons
against the Defendant/Judgment/Debtor. He endorsed it
for:
(i) A declaration that
the Plaintiff is the beneficial owner of the Defendant’s
right title and interest in House “No 18 Macroni Street,
Adenta Housing Estate, Adenta.”
(ii) An order that the
Defendant shall yield to the Plaintiff vacant possession
of House No.18, Macroni Street, Adenta Housing Estate.
(iii) An order that the
Defendant shall surrender to the plaintiff documents or
title in his hands relating to house No.18, Macroni
Street, Adenta Housing Estate.
After taking evidence
the Learned High Court Judge gave judgment in favour of
the plaintiff on 28th February, 1997 against the
Defendant. The plaintiff applied for and obtained leave
to issue a writ for vacant possession of the house.
On 20th October, 1997,
Joseph William claimed the house as his; and
subsequently there was an interpleader Suit and the
ruling to the inter-pleader Suit was given against the
Claimant. The Claimant, Joseph William being
dissatisfied has appealed against the ruling.
The Claimant/Appellant
filed original grounds 1 & 2 and additional grounds (a),
(b) and (c) of appeal.
I shall deal with
ground (2) of the original ground of Appeal. This ground
of appeal is as follows: —
The learned trial judge
erred in holding that the Plaintiffs/Respondents are
entitled as against the Claimant/Appellant to the
property in dispute.
From the record, the
Defendant/Judgment/Debtor sold House No. 18 Macroni
Street Adenta to the
Plaintiff/Judgment/Creditor/Respondent in January 1995
for ¢16.500.000.00 and eight months after he again sold
the same house to the Claimant/ Appellant for
¢23,000,000.00. The Defendant/Judgment/Debtor prepared
documents for the two purchasers of the house but none
of these documents was registered.
At the time the
Claimant/Appellant bought the house he did not know that
the house had been sold to the
plaintiff/Judgment/Creditor/Respondent. Even if the
Claimant/Appellant had made a Search he would not have
found out that the house had already been sold because
the document given to the
Plaintiff/Judgment/Creditor/Respondent was not
registered.
The Learned trial judge
based her judgment on the principle of first in time
should prevail and dismissed the Claimant/Appellants.
Learned trial judge stated in her ruling as follows: —
“The assignment between
the defendant herein and the Plaintiffs is dated 27th
day of January, 1995. Paragraph 4 of the said agreement
states:
The Vendor hereby
conveys and assigns to the purchasers all rights title
and interest of the Vendor in the property. Exhibit
‘B1’—a receipt attached to the Claimants affidavit is
dated 6th September, 1995. The said receipt was issued
to the Claimants by the defendant herein.”
On the strength of this
the learned trial Judge stated that since both interests
are not registered, the first in time should prevail and
she subsequently dismissed the inter-pleader of the
Claimant/Appellant.
The Claimant/Appellant
after buying the house was put into possession and we
developed it from a two-bedroom house to a four-bedroom
house. His mother was in undisturbed occupation of the
property till December, 29th 1997 when the claimant's
mother was ejected.
On the 6th of
September, 1995 the Defendant/Judgment/Debtor wrote to
the State Housing Corporation for the consent of the
State Housing Corporation for him,
Defendant/Judgment/Debtor, to assign his interest in the
house to Mr. Joseph Williams, the Claimant/Appellant.
The Defendant/Judgment/Debtor attached a copy of the
Deed of Assignment for the pursual of the State Housing
Corporation.
From what I have stated
above that the document given to the Plaintiff/Judgment/
Creditor/Respondent was not registered therefore the
Claimant/Appellant could not have found out that the
house had already been sold to the
Plaintiff/Judgment/Creditor/ Respondent even if the
Claimant/Appellant had made a search. The
Claimant/Appellant was an innocent purchaser.
The Learned Trial Judge
rested her decision on the equitable maxim qui prior est
tempore potior est jure, which means “He who is first in
time is the stronger in law.
This rule according to
decided case is not however inflexible. See Ayekpa vrs:
Sackey Mensah (1984-86) 1 GLR. page 172 at page 177.
In the instant case the
Plaintiff/Judgment/Creditor/Respondent was not put in
possession of the house when he purchased it from the
Defendant/Judgment/Debtor in January 1995.
Howbeit, the
Claimant/Appellant was put in possession of the house in
September, 1995 and he developed the house from two
bedrooms to four-bedroom house. The Plaintiff/
Judgment/Creditor/Respondent did not do anything to
prevent the Claimant/Appellant from developing the house
for two years before he (Plaintiff/Judgment/Creditor/
Respondent) took the action against the
Defendant/Judgment/Debtor. Equity aids the vigilant and
not the indolent. In my candid opinion the Plaintiff/
Judgment/ Creditor/ Respondent was guilty of omission to
stop the Claimant/ Appellant from developing the house.
Therefore his prior equitable in the said house cannot
be accepted against the Claimant/Appellant.
At this stage I will
refer to Halsbury's Laws of England and Equities Rank in
Order of Time.
“See. 10. The Legal
Estate Gives Priority. When there is an existing
equitable interest in property, and an interest is
subsequently created in favour of a purchaser for value
without notice of the earlier interest; and that
purchaser either gets in the legal estate at the time of
his purchase, or, in certain circumstances, after his
purchase, his possession of the legal estate gives him
priority over the earlier equitable owner.
The equities being
equal except as regards time, the legal estate, property
got in by the owner of the later equitable interest,
entitles him to hold the property either as absolute
owner or until his mortgage is discharged, as the case
may be. There is, in the absence of notice or of any
other circumstance to postpone him, other than that of
being later in point of time, no equity attaching upon
his conscience by virtue of which the court will deprive
him of his legal advantage; and the subsequent purchaser
is entitled to the like priority if he has the better
right to call for a conveyance of the legal estate. The
importance which courts of equity, in deciding
priorities attach to the legal estate, is an instance of
the general principle that equity follows the law”.
Since the
claimant/Appellant bought the house in dispute for value
without notice that that house had been sold to the
Plaintiff/Judgment/Creditor/Respondent the Claimant/
Appellant got the legal estate of the house at the time
of the purchase his legal purchase gives him priority
over the earlier purchaser i.e. the
Plaintiff/Judgment/Creditor/ Respondent.
By reason of this legal
purchase by the Claimant/Appellant this court
necessarily and rightly allows the appeal by the
Claimant/Appellant. The ruling of the High Court Accra
is set aside. The Claimant/Appellant is declared the
owner of House No. 18 Macroni Street, Adenta.
S.T. FARKYE
JUSTICE OF APPEAL
TWUMASI, J.A.:
I agree.
P.K. TWUMASI
JUSTICE OF APPEAL
COUNSEL
Mr. Barton Oduro for
the Claimant/Appellant.
Dr. Seth Twum for the
Plaintiffs/Judgment/Creditors/Respondents. |
